2008: A year in the life of UK pharma

Patient power proves decisive in battle for access

Social networking helped a new breed of informed patient advocates win the fight for access to new drugs

November saw the government’s cancer czar Mike Richards publish his eagerly anticipated report on top-ups for NHS.

Calls had been growing for many months to reform the situation which meant patients who wanted to pay for the latest cancer drugs privately also had to foot the bill for the rest of their NHS care.

Richards did indeed recommend the NHS ban on top-ups be relaxed, but this was in many ways not its main conclusion. Rather, Richards made it clear that NICE’s appraisal system had to change to allow ‘end of life’ drugs to be recommended for use on the NHS in the first place.

NICE is now consulting with stakeholders on the plan to create an ‘end of life’ QALY. This will adapt NICE’s health economic assessment to allow greater value to be put on a few months of improved health at the end of life than it would in non-terminal diseases.

This solution – a long time coming for many patients and carers – is the product of Richard’s thinking and laid out in his eloquent report, but the influence of patient groups on the outcome should not be underestimated.

This year saw patient organisations and campaigners grow in stature and influence in the debate. This applies not just to the full-time, highly organised and well funded charities such as MacMillan Cancer Support, but also the efforts of ordinary patients and their supporters in their fight for access.

Many campaigner gained support through local and national media, and undoubtedly the most high profile of these was Kate Spall, who took up the fight in 2007 when her mother was refused Sutent to treat her renal cell carcinoma.

In June, Pharmafocus spoke to Spall about her remarkable success in helping individual patients fight their local PCTs to gain ‘exceptional case’ access to cancer drugs. The length of NICE’s appraisal times and its frequent rejection of expensive drugs has meant PCTs have had to field exceptional circumstances requests for treatment, either when a product is awaiting NICE appraisal or has been rejected.

Spall had helped 50 patients mount challenges when these committees rejected requests, and found many members of PCT exceptional circumstances committees ill-equipped to make such serious decisions on funding treatment.

“PCT managers are acting way outside their expertise and making clinical judgements on patients when it’s not their job to do so at all,” Spall told Pharmafocus. “The level of ignorance is shocking.”

A long-term solution

The new rules will mean that local conflicts like these should become rarer, with more drugs approved by NICE in the first instance. However, the model for highly proactive lobbying groups is now established, and will be here to stay.

There were also several examples of a new ‘guerilla’ style campaigning group which used social networking sites Facebook and MySpace and online ‘user-generated’ encyclopaedia Wikipedia to rapidly create a community of interest.

Once such group was Justice for Kidney Cancer Patients. The group was set up by patients who had been denied access to drugs for renal cell carcinoma such as Sutent.

Mobilised over the internet, in late August, the campaigners descended on NICE’s headquarters in London to present letters of protest in person, and to make their feelings heard.

Just how flexible and accommodating NICE’s new ‘end of life’ QALY will be is central to the question of whether access is increased to new cancer drugs. Equally vital will be the success of the new so-called ‘patient access’ schemes proposed in the new PPRS, which will see pharma companies negotiate prices against access with the Department of Health.

But whatever happens, the internet age has now helped patient voices to establish themselves as active and increasingly well-informed players in the access to medicines debate.

Shire’s move to Ireland sends warning to government

One of the UK’s leading pharmaceutical companies announced in March that it was to move its tax base to the Republic of Ireland to benefit from a more favourable rate of corporation tax.

Shire said its business and shareholders would benefit from the move to the Republic, where tax rates are less than half those in the UK.

The move attracted a great deal of media attention, and was heralded as a potential beginning of a tax exodus from the UK.

The company has now opened a new office in Dublin, where its board of directors will meet, but its headquarters will remain in Basingstoke, Hampshire.

The company said there would be no job losses or relocation of existing staff from the UK and the way its business is run will not change as a result of the decision.

Shire said the shift reflected the transformation of its business over the last ten years “from a primarily UK business to an international business, with the vast majority of its revenues generated from outside the UK.”

It added: “Shire has concluded that its business and its shareholders would be better served by having an international holding company with a group structure that is designed to help protect the group’s taxation position, and better facilitate the group’s financial management.”

Shire applied to the High Court to set up in a new holding company that will be incorporated in Jersey and resident for tax purposes in the Republic of Ireland, where it will be subject to a corporate tax rate of 12.5% rather than the UK’s 28%.

The newly agreed PPRS agreement should help reassure other companies in the sector that the UK remains a good business environment, but the government must remain in touch with the sector and its need for competitive advantage in all aspects of the business.

Lipitor in decline as PCTs take control

In April new official figures for 2007 showed sales of Lipitor had dropped more than £50 million in England in 2007, as the blockbuster cholesterol drug fell victim to aggressive cost cutting by PCTs.

The decline in Lipitor was especially significant because it was a clear sign that PCTs had seized control of the primary care prescribing budget, and were now dictating the market to GPs and pharmaceutical companies.

Sales of Lipitor (atorvastatin) from GP prescribing fell £53 million in 2007 compared to the previous year, representing a very substantial 15% decline for the UK’s biggest selling drug.

Lipitor has been targeted by PCTs as one of the most obvious targets for cost cutting, with GPs instructed to switch patients en masse away from the drug to simvastatin, a much cheaper generic alternative.

Pfizer maintained its drug is far more effective than simvastatin, and therefore still represented good value for money, but this message fell on deaf ears during 2007 when PCTs were under pressure to find cost savings.

The figures outlining Lipitor’s decline emerged from Department of Health statistics on prescribing for 2007, which saw England’s GPs prescribe treatments worth a total of £8.4 billion.

This represented a rise of just 2% overall, a figure which was considered a triumph by prescribing advisors and chief executive of PCTs, who were asked again to clamp down on GP prescribing costs by two separate reports.

Sartans targeted

Another area of high volume prescribing heavily targeted by PCTs was hypertension medicines. In particular, PCTs concluded the ARB class of drugs for high blood pressure – known as the ‘sartans’ – were also being overprescribed and overpriced.

GPs were instructed to switch away from the most expensive sartan, Merck Sharp & Dohme’s Cozaar, in favour of cheaper drugs in the same class.

The figures for 2007 suggested this has had a major impact on the market, with prescribing of Cozaar (losartan) dropping by 6%, allowing Takeda’s Amias (candesartan) to take a slim lead of some 11,000 prescriptions over its more expensive rival and become the most prescribed sartan.

Nevertheless, despite the fall in prescriptions for Cozaar the drug’s higher price allowed MSD to retain the lion’s share of sales – £93 million compared to Amias’ £50 million.

Big pharma continues the streamlining process

Sluggish growth and changing business needs prompted pharma to continue restructuring and cost cutting

This year saw pharma and biotech companies of all sizes restructuring and streamlining their businesses, with many redundancies in the US, Europe and the UK.

Large-scale redundancies in the industry’s biggest companies have become commonplace over the last three or four years, with streamlining affecting all departments from frontline salesforces to drug discovery and development.

Faced with modest growth in sales, a shift in growth to Asia and rapidly evolving R&D, big pharma continued to seek new economies and efficiencies.

The ABPI provided an overview of how the UK industry had slimmed down in recent years, producing an estimate of 8,000 pharma industry jobs cuts over the past three years early in the year.

In the UK, many of the cutbacks to salesforces had already been made in previous years, but its status as one of Europe’s leading R&D and manufacturing locations meant it was vulnerable to more job cuts in 2008.

This was followed by new cuts announced by AstraZeneca and GSK, the UK’s two homegrown big pharma companies. In January, AstraZeneca announced that around 300 jobs would go at its R&D operations in Alderley, Cheshire.

Then in October GSK announced 850 jobs were to go in early-stage research and development at sites across the world, including at its research site in Harlow, Essex.

Witty takes the reins

In May, Andrew Witty succeeded JP Garnier as GlaxoSmithKline’s chief executive. Witty pressed ahead with existing cost-cutting programme and added his own initiatives as well.

Witty re-drew GSK’s corporate map, creating new geographical units to reflect a shift towards new emerging markets and to manage mature markets more efficiently.

Creating a new Emerging Markets business unit, Witty said: “Emerging markets, such as Brazil, Russia, India, China and the Middle East, are significant growth drivers of the future. They are already contributing close to 25% of today’s market growth and are forecast to grow even faster in the future, around triple the rate of western countries. It is essential that we have an operating structure that is dynamic and responsive to the opportunities in these markets.”

Manufacturing cuts

In November both AstraZeneca and GSK announced plans to cut back their European manufacturing base.

AstraZeneca announced the loss of 1,400 jobs in its European manufacturing and supply chain infrastructure.

The company said the introduction of new manufacturing processes has given it the chance make efficiencies across its supply chain, with job cuts being made between now and 2013, subject to consultation. Three European sites are to close: Porriño in Spain, Destelbergen in Belgium and Umeå in Sweden, while further job cuts will be made at facilities in Macclesfield in the UK and Södertälje in Sweden.

The company will set up a regional packing strategy, which it says will improve its ability to respond to customer needs and equip the business for growth in emerging markets.

“These moves are a continuation of AstraZeneca’s programme to improve the organisation’s productivity and efficiency,” said David Smith, executive vice president operations, AstraZeneca. “It moves the supply process closer to the customer, responding to their requirements and improving the security of the product wherever it is bought.”

GlaxoSmithKline announced plans to close its manufacturing site in Dartford in the UK, with operations being phased out over four years.

The proposed closure will result in the loss of around 620 established roles in Dartford, with final closure expected in 2013. The closure is due to a major fall in demand expected for the site’s two largest products, epilepsy treatment Lamictal and Valtrex for herpes, which are now off patent or approaching patent expiry in most countries.

GSK announced at the same time cutbacks in the rapidly decelerating US market. It axed around 1,000 jobs in its US salesforce, reducing the total number to approximately 7,500.

Growing investment in Asia

Meanwhile, AstraZeneca announced new investment in the growing Asia Pacific markets, with more being spent on its Wuxi plant in China to support the company’s continuing growth in the region.

The company says part of this investment will provide additional packing and formulation capabilities and enable Wuxi to become the packing centre for Asia Pacific, complementing those in Europe and Latin America.

GSK also announced plans for continued growth in Asia. The company plans to increase its R&D staffing in China to 350 in the next few years. While this represents a doubling of numbers, it is still dwarfed by the numbers employed in Europe and the US, so commentators shouldn’t herald the death of European R&D just yet, despite justifiable concern.

And while the savings made from streamlining help prop up profitability, pharma’s leaders make it clear it cannot be a long-term business strategy.

“Improving productivity will continue to be a challenge [but] we will never cost cut our way to success,” AZ’s chief executive David Brennan conceded recently.

Pfizer and MedImmune invest

But it was not all doom and gloom in terms of pharma investment in the UK.

In October, MedImmune opened an expanded R&D centre in Cambridge, the site formerly run by Cambridge Antibody Technology.

MedImmune is the biotech arm of AstraZeneca, thus while the company was disinvesting in some of its existing small molecule research in the UK, new money was being put into biotechnology.

The MedImmune centre is in Cambridge’s foremost biotech campus, Granta Park, and will provide capacity for up to 250 employees and around a dozen senior clinical positions have been created.

Jane Osbourn, site leader and vice president of research at the Cambridge site said: “The Cambridge site is now flourishing as part of MedImmune. There is great expertise on the site and we are looking to grow that further.”

Meanwhile Pfizer has opened its own cutting-edge research project at the same site in Cambridge.

Pfizer Regenerative Medicine will have sites in the biotech hubs of Cambridge, UK and Cambridge, Massachusetts and will recruit for 60 UK vacancies over the next two years in areas like in vivo stem cell research and cell and molecular biology.

The UK unit will predominantly focus on age-related and degenerative disorders with particular interest in common cellular mechanisms and disorders of the central and peripheral nervous system.

The Code of Practice: Are we compliant?

The year saw some very significant changes to how the industry operates in its marketing and in relationships with healthcare professionals and patient groups.

The focus for these changes in the UK was another updating of the industry’s self-regulated ABPI Code of Practice (as part of a European-wide change see below) and more care and attention was put into following the Code than ever before. Despite this, mistakes continued to be made, sometimes very serious ones.

Roche’s Xenical misadventure

In July, Roche was suspended from the ABPI for six months after being found guilty of bringing discredit on the UK pharma industry.

The company had breached the UK industry’s self-regulatory Code of Practice by linking use of its obesity drug Xenical in private diet clinics to payments to the company that ran them.

An investigation into Roche’s activity between 2003-2005 was only launched this year, after a former company employee saw a February Financial Times article and lodged a complaint.

The piece alleged Roche had sold large quantities of its obesity drug Xenical to a firm running a number of private diet clinics. Moreover, it said Roche had agreed to provide £55,000 for that operator to purchase another clinic.

The PMCPA, which oversees the Code of Practice, ruled this supply of Xenical was inappropriate, and that the proposed payment, part of which had already been paid, was linked to use of the drug and so breached the Code.

The violation was an embarrassment for Roche which said it was disappointed to have fallen short of Code standards, and was already joining peers in bringing in a dedicated compliance team.

Compliance departments

In August, Pharmafocus followed up on the Roche story by reporting on the growing number of companies with dedicated compliance departments.

The creation of the new departments represents a major shift in the culture and practices of the industry, and goes hand-in-hand with a new balance of power between the medical and marketing departments. One senior medical advisor said the changes were a response to the tough environment and growing demand for transparency.

He said: “People have to be seen to act ethically so their products stay on the market. There is a lot of competition out there, and people can’t hide anymore.”

AstraZeneca took a lead in the field, launching its own Code of Conduct for all of its 60,000 employees worldwide, and deliberately exceeding locally agreed standards of conduct. It even hired a third party company, EthicsPoint to allow potential whistleblowers to report misconduct in confidence.

Wyeth and Pfizer are also understood to be particularly active in compliance in the UK, and regard their measures to be over and above what the Code demands. Roche is also determined not to fall foul of the Code again, and has established its own compliance department – a change the it says pre-dates the ABPI investigation. Roche’s compliance team is made up of seven people, some coming from a commercial/marketing background and others from a compliance background.

Outside the team there are 30 people with functional roles in departments who have responsibility for compliance, plus a further 20 deputies. By the summer it had trained 620 head office and field based staff across 26 departments, has launched an e-learning programme, and distributed flyers promoting compliance to employees.

Despite such measures, mistakes are still being made, as demonstrated by the recent censure of Lilly for going too far in its disease awareness campaign 40over40, in support of its erectile dysfunction brand Cialis.

Such misdemeanours are being taken more seriously than in earlier years by the PMCPA, and it is hoped its commitment to updating the code will keep threats of new externally-enforced regulation at bay.

European patient relations

In July, pharmaceutical marketers across Europe had a new set of rules to follow if they wanted to work with patient groups.

A revised code of practice on the issue was put into effect by European industry association EFPIA to ensure ethical behaviour and transparency. It was the first time that the EFPIA’s 2,200 members, across 31 countries, had committed themselves to a common set of ground rules and the industry has had since October 2007 to prepare for the changes.

Among the raft of new requirements companies must make publicly available a list of the patient organisations to which they contribute money or other support by March 2009.

Other Code stipulations include:

* Companies cannot insist on being the sole means of funding for patient organisations

* They have to obtain written permission for the use of patient groups’ logos

* While firms can correct factual inaccuracies, they cannot seek to influence the content of sponsored patient organisation material to favour commercial interests.